AvalonBay Buys Rental Townhomes Near Austin for $49M

AvalonBay Communities recently bought a 126-unit townhome community in Bee Cave, near Austin, for $49 million, according to an SEC filing.

The Virginia-based REIT paid $390,000 per unit for the rental complex, at 4810 Brisa Way. NRP Group was the seller. The complex is 95 percent occupied, said AvalonBay’s senior director of investments Jeff Lucas.

This was AvalonBay’s sixth multifamily purchase in Texas since 2021. The firm owns and manages five communities across the Dallas-Fort Worth metroplex, including in Farmer’s Branch, Frisco and Addison.

The Bee Cave property, built in 2022, is AvalonBay’s first ready-to-lease project in the Austin metro. It also started construction on an apartment development in the North Austin neighborhood of Tech Ridge in September.

That project, called Avalon Tech Ridge, is slated for 444 units in the first phase of construction, which is expected to be complete by early 2026, said Jennifer Wiebrand, AvalonBay’s senior vice president of development for Texas.

The company identified Dallas and Austin as priority expansion markets in 2020, along with South Florida, the Denver metro area, and the Raleigh and Charlotte metro areas in North Carolina, Lucas said.

Record multifamily supply is pushing down rents in those metros this year. Nine of the 15 submarkets with the steepest rent cuts across the nation are in Austin — the Southeast Austin submarket ranked first, with a 12.8 percent drop in rents in the last year, according to Madera Residential.

AvalonBay sees that as a “great window” to jump into the market, Lucas said.

“We’re literally kind of tip of the iceberg here on what we ultimately envision Texas to be,” he said.

The company entered a frothy market, with a relatively tight transaction environment as high in-migration and job growth attracted a flurry of investors, he said. But the froth has since come out, and the firm expects to benefit from its timing over the next few years.

The national interest in Texas multifamily waned slightly in anticipation of declining rents, but it’s making a comeback. Long-established commercial real estate developers, and institutional investors with nationwide reach, are pointing to signs of multifamily markets bottoming out in top Texas metros, and many have hedged their bets. Major players, like Blackstone and Brookfield, are making significant investments in multifamily markets in Texas, even amid elevated debt levels and a temporary dislocation in lending and sales in top markets like Houston.

The number of multifamily building permits fell about 35 percent in Austin between 2021 and this year. In Dallas and Houston, they plummeted by over 50 percent — but AvalonBay is one of the companies looking to find an advantage in lower density suburban housing.

“I think it will really pay off when we’re delivering units in 2026,” Wiebrand said. “If you hold to the premise — oversimplified — of ‘buy low, sell high,’ this is a pretty good time to be buying or building.”